long as the playing field is level, u.s. institutions will be strong and capable of responding to them. on the funding issue, it's a question that has more to the essay. capital markets are strong. those borrowers who have access, the larger enterprises, how multiple options to choose from funding investments that they choose to make, assuming their credit worthy. the same is true inclining, particularly for larger enterprises. the major banks have stood by their large cuts to america's pretty systematically through the craze says and certainly the recovery period. the problem comes in as you go down the chain through medium is

smaller enterprises and messaging into households where the experience of the particularly in housing finance and consumer finance were in a transitional period, where we haven't yet figured out what takes place as the consumer finance industry, which has been largely destroyed. it's a decent business and you can see examples that have survived. this basic decisions to be made about how much it should be regulated and how much you should be supplied by financial services part of the industry and in the memo, and the smaller interest enterprises, the financial system is weaker, less capacity coming out of the crisis. it is a credit deficit in the

community and some regional bank that again is a serious public policy to address the next couple of years. >> thank you. my, what teacher perspective on the short run and long-run, so let's start on the short run because we are right in the middle. we sort of avoided the fiscal cliff. sad events involving over the next couple and how are these going to play out? >> if anyone you think should be played out, i'd be thrilled to know the answer because it's one of the more confusing moments. then they start by saying it's moment which do think there's an awful lot of good news in that news. the conference is focusing on the overall economic picture in the pieces that go into feeling economic growth and innovation. there's so much goodness to be had, so many ideas in a think

tank where so many developed about luck and hope that growth in our country cynic at decision to use those that have a positive outcome. if one, the whole fiscal issue as i could coming up the wheels of everything else. right now there's basically no oxygen left for any other issues. as a thing about immigration and energy policy, this one is going to have to get resolved one way or another before we can go back to the exciting ideas that can lead to the next waves in the economy. the other one is the political environment -- sorry. it can be hard to ignore, but were going to do it. another piece of the political environment, where we had the

ability to fix the situation. we know to fix this. we needed a comprehensive dead deal that's big enough to stabilize the debt and we'll remember that. when you're trying to balance the budget. were not very. were not going to be there soon. you have to make sure that that's not faster than the economy and it's on a downward path and the problem is so big or too calm% year to look at every part of the budget. you have to look at defense spending. you have to clearly focused on health care costs, which go faster than the economy. we have to fix our social security system, which makes promises bigger than what we can pay out on the road. we have to raise revenues. we started down the path, but we haven't looked had to do about overhauling tax system, which would you want to raise revenue, you could do in could do in the way bad for the economy hallway discussion helps increase competitiveness and modernizes our tax system.

so we know what the answers are. were going to fight it the specifics, but we don't know at what point the political system is going to be willing to make all those traces, which are difficult compromise on both sides and put this issue to rest so we can go back to all the other things were going to fight about. the fact you can sue a policy solutions are more passed the tennis doesn't matter, but everybody recognized the threat that she can't possibly imagine a real growth, and without a sense of stability from knowing what changes obesity you can not planning, investments, job creation, all the necessary pieces of moving the economy forward. but the big wild card is when people are willing to make these type choices instead of using them to fight in the normal political boxes. what do i think's going to

happen next? it's often a different path. if you think about prospect theory which basically says when you deliver good news committee want to do it in lots of little pieces. at first you have to tell someone that cottony promotion. and that they've got a raise. then it got a bigger office in each piece of good news is good and makes people happier. if you're during badness, just to give you a foreign airline delay can't you just want the bad news in one big piece of that's true of so many names. what were doing is breaking out the way were going to fix the budget and redoing it in little pieces. we have savings early on a cup of years ago in continuing resolution. we had savings that came out of the budget control act. who talked about to sequester, which is not likely to hit that they might be in place for a while. when the super committee failed, sequester was put in place. we just raise tax rates on the

well-off, so we're doing this in pieces. each one of the bloodiest political battle instead of declaring the jury, were angry and they were before, make it harder to do the remaining policy pieces. we know what we have left. we have to do with health care costs, which the truth is we don't know how to fix a system in its entirety. but look at ways to control health care costs to get in control of government programs and medicare that we have to go back and do this every couple years. we have to study what works and put more policies that are working in place. we have to do with other entitlement. social security farm is a contentious issue in this country. it's always a tough battle, but the longer we wait to make changes, the more difficult for the people who depend on these programs. we have to go for the tax reform, which is great when you talk about a bradley because the tax cut is a disaster.

when you talk about the ability to broaden the base, lower the rates increase revenues, that's a pretty good system. it's pretty desirable to think how to reform the tax code. but when you start talking about specifics for the home mortgage deduction for state and local taxation, because my difficult. so we don't easiest pieces. you don't have to type a single specific policy. tax in 1% is pretty darn easy, even if your the 1%. this guy takes more to fix the problem. now we have the hardest part that's how we unravel this next. the next piece has to focus on entitlement reform. that's the biggest fix yet to be addressed. we have three action and for some moments. the sequester, which takes time for two months has broad-based

across-the-board cuts to watch is a long way to do policy. it did take place, but she don't want to put in place abruptly because we deal with a technical recovery. phase in changes gradually and you have to pick and choose instead of saying this is too hard, were going to let an across-the-board cut to one place, is unforgivable is the way to make these policies. second, you have the debt ceiling. it is a marketing tool the country hostage. we know there's going to be a fighter for the debt ceiling. in the past that feeling with a speed bump that reminded folks who are borrowing too much and needed to make changes. it could be a useful reminder. not because of sars are people really worry about the fate of the u.s. government and its economic damage, which is what we saw last time. the third piece, the fact government spending is going to expire in the triple witching hour of these issues is if this

will close and is that going to force action of the hardest pieces still remaining for the fact that they still for all intents and purposes, it's good we didn't go to the fiscal cliff, good release revenue, but we basically did what we always do, which is punted the hard choices and try to declare bipartisan victory. it wasn't there. the question as to make make these next moments were set to getting us to really take on policies. and this is part of your question that will do it the necessary savings the next 10 years, but just as important or perhaps more, put policies in place to bring savings down gradually over time because it long-term as a threat to this this budget. if you look at this chart.

it's the growth in spending that comes from health care, agent of our population, interest because it are too much, which out the budget and making gradual changes now, whether through fixing the way we measure inflation are promising to gradually raise the retirement age, the small savings wouldn't save so much money in the short or medium term, the two have met good to bring in long-term ounces into place. the question is how you hope the political system not in great shape before the can and not it's going to make those changes now, which would do a great amount of good down the road. and it's hard to be overly optimistic right now. the fiscal cliff could've been so much better than it was. changes will have been because they have to have been and where are the luckiest country in the world dealing with this because

it's a gift the markets give us has been a safe haven of having more time to the changes in place in another country. we can say we're going to do them and starts another outcome which is a smart time for economic recovery. we be foolish to walk away from the opportunity to do this it easy way they waiting until markets push us too. i hope and continue to believe we wouldn't do that to ourselves that will make these choices in a way were they advanced into this plan room. the truth is that fun untranslated longer than we should have. but as the next election cycle with the public interest has 30 taken in economic toll on what could have been because the bottom line is not only do we put these policies in place, we have to be thoughtful about how we do them. when we talk about spinning, we think about how we not only bring spending down, but we just cannot reprioritize. our budget completely emphasizes

consumption. when we talk about revenues, there's no question within a shia population you have to bring in my revenues than in the past. if you do the same outdated anti-competitive tax system, to choke your economy. they seize the opportunity and are both on individual and corporate side to open up our economic system, you can do this in a way good for the economy. we approaches is to make and should give ourselves the time and thoughtfulness to put policies in place to do with the deficit that help in addition to the stability of god was going to happen in promoting economic growth. >> let me pick up on one piece of data from health care. as you know, government spending on health is not necessary the biggest cause of the deficit right now, but if you look out 20 years, 30 years, the alligator that's going to

swallow everything. i was on a panel last week with a lively argument to run should we raise the age for medicare? should we try to change the system and move away from the first or this? has the obama administration done a lot to lower the cost of health care going forward so we don't need to do much more? what do you guys think this in practical terms panisse began on health care posits an unpopular issue. if you poll people, they say we don't want to cut medicare. where do we go dealing with that piece of the puzzle? >> at romance and when i was in graduate school to study fiscal policy was right on the time they don't the budget. i thought now what am i going to do? change careers another problem is solved. the long-term problems are still there and had to make a choice whether to study social security or health care.

i jumped right into becoming a social security expert because health care is so hard. that's not to say i haven't studied health care because there's no other issue at the core of all this. the problem is we don't audience is in the best thing we can do right now is put in place as many different attempts to control health care costs and evaluating what works. we don't know whether the hope to reforms that were. we see the anticipation about this to happen that could be temporary and could be permanent. one of the things in all this is better data, gathered information, analyzing and figuring out what's working and doing more of it. one of the important things were exchanges on health care. that gives you the room to put in what she wouldn't have

before. that would've been devastating before. now because we have health care exchanges come and make sense as a policy to increase the retirement age for medicare. at least it lines up a social security. as we live longer, health care costs of the biggest on right now because the cost of aging of the biggest costs right now and incredible cost on society we need to find productive acp people who can and the workforce longer. creating incentives is an important one. the bottom line is the most important area is the incentive structure and car sharing and how we set up delivery systems so the incentives for health care, none of them make sense right now with any basic economic perspective going to search those that you can do that while protecting people who depend on the systems cannot shift the cost to people who can't afford it. if you have the payment of dues structure, you're going to have

a crummy system while that's not going to fix all of the comments one of the biggest stars. >> let me turn to bob mcdonald, president -- chairman ceo of prague during gamble. you have a very successful company. we've got a lot of operations in the u.s. and around the world. what do you see as the most growth promoting strategies that can be followed here? >> thank you, martin. i'd like to talk about two important component i think are important for economic growth promoting strategies. the first which has been discussed already in some length by our panel is addressing our trajectories for public that doesn't crowd out private investment. that requires reforming entitlement programs as mina and lewis have taught about because they are the primary drivers of

spending growth. if we don't get them under control, they will secure for future generations. so that's critically important. the second and equally important is improving our country's global competitiveness and do they not through free and fair trade as well as a more competitive and comprehensive tax reform. the recent congressional action on the fiscal cliff is a short-term fix. it avoided us falling off the cliff and sending the economy into recession, but fail to address larger issues affecting deficit and also economic competitiveness of the united states and those of us who run global companies care very deeply about that. preserving the opportunity for comprehensive and revenue choke tax reform is a critical and very important to creating

progress tax law that will enable american companies to compete effectively against companies that are domicile in other countries around the world. we need a level playing field. we don't have a level playing field today. the united states has the highest corporate tax rate in the world and also the united states is one of the few countries in the world with a system that is called a global tax system rather than a territorial tax system. during the 113th congress, we're going to continue to advocate comprehensive tax reform that broadens the base they reduces corporate tax rates in those to a competitive territorial system. procter & gamble pays income taxes in over 100 countries around the world good business taxi firm should provide a level playing field of each business has the confidence of knowing it

pays roughly the same amount of in contacts that its competitors and markets at home and abroad. and deficit reform, the obvious problem is currently the united states has been spending at a rate that far exceeds the rate of revenue we risk youth. this situation often occurs during recession as the lagging economy produces less revenue from in common payroll taxes or government spending programs continue to ask man. the longer-term problem is that related to the recession despite the unprecedented fiscal stimulus through government programs. for example, some economic literature suggests renée country's debt to gdp ratio exceeds 90%, the long-term gdp growth rate structurally slows

down. this adversely affects everyone's potential standard of living. the u.s. deficit now exceeds 100% of debt gdp ratio. so we may be experiencing the initial tax of extended deficit financing. the longer-term problem is to a very large extent a product of key entitlement programs that are an important part of the nation's safety net for the elderly. the growth of spending in the nation's entitlement programs can help a program secure for current and future workers than we think that's very important. by 2035, there will be only two workers per beneficiary to 60 federal retiree who have 50% longer retirement than encouraging 1895. so this is a serious issue. currently the social security retirement is a pay-as-you-go

system that provides for and no benefits and tax collects. this will lead to insolvency, particularly with the increasing number of baby boomers retiring every day is referred to by maia and lewis. others news, nor do i have the program make expertise necessary to suggest solutions, it's important that congress and allies acceptable methods to assure that these programs to retirees. reforms can and must be adopted to undermine the benefits of current retirees are obviously won't be accepted. social security benefits must be preserved for americans now participating in the workforce. it can be done if we ask rather

than later, we'll have an easier chance of getting it done. in terms of innovation, innovation has been proctor gambles success in doing business. we spend about $2.5 billion to your research and development. it's 40% more than the next largest competitor. we spend about $400 million a year on consumer research to understand the unarticulated consumer needs we can design products to solve. innovation is their lifeblood, the primary way we accomplish our purpose of teaching on improving lives in innovation is what prevents commoditization of categories. it helps us reduce costs, helps us deliver products that are affordable for consumers around the world that we serve over 4 billion consumers every single

day. over decades with demonstrated the capability to innovate reliably and successfully. the fibroblasts multiyear renovation program on our core business and within priester focus on discontinuous innovation. innovation of new categories that have a 10 out of before such as when we introduced swifter as a way to clean your floors are blind or new single use laundry to church in that can be put in the machine is the most concentrated form of laundry detergent available today. we transfer innovative ideas. for example, this type knowledge we've invented were now in the process of expanding around the world and that's leading to jobs overseas because our plants have to be near consumers were trying to serve. we can't export pampers

disposable diaper from pennsylvania to china and make money on it. we have a hundred and 50 factories around the world. the business internationally results in jobs across state. 20% y in international business. 40% of jobs in the state of ohio for why an international business. being globally competitive is incredibly important to the growth of our company and the growth of the economy in the 90s states. we have the worlds best global companies in the united states, but right now we put them at a disadvantage with their tax policy, fiscal policy and many things every type about. >> thank you. >> i actually grew too strongly that we have to do a tax reform and we can't have taxes that make our companies competitive.

i agree with you we've got to reform entitlements and bring down the cost of entitlements. as a leader, you have a bit of a pr prop him and selling that message. faq to say how does the business community freeness message to be part of the debate about what to do? >> and the american who knew we had the highest corporate tax rate in the world, second to none would agree that's probably not a good idea. particularly send the american people are the workers in our company. he gets back to global competitiveness. having the highest corporate taxes in the world is not globally competitive. a worldwide system that prohibits u.s.-based multinationals and we have the best one, moving money from one

country to the other reason the united states to make an investment here in double taxation is not a level playing field i would want american companies have a level playing field with the traditional come as they compete with. is in china not too long ago and the government in china is that in our health to help them understand how to create globally competitive companies and they were asking american companies, american ceos to create companies. we need to reform our system to allow companies to be competitive before international companies who have been vantage is given to them by their government and systems become fierce competitors.

>> them involved at the moment they project on financial regulation and one of the things this week to change the architecture with regulators? i was told the chinese are in the process of setting up the regulatory system when it came to the united states and so should we do with the same way you? reset now, maybe not. ralph, you are really part of a private equity investment company. what do you see is the significance of this fiscal debate for innovation in the u.s. and economic performance here in the u.s.? >> i agree with a lot of what it's been said already and this whole fiscal issue centers around the competitiveness of american business and american come nason production in the global economy because we can't

provide 10 years or 20 years and help one way or another through trade protection or other means we will insulate or protect their businesses or workers from winning globally. so the only path to america winning economically is that we create a regulatory environment, a tax environment and competitive regime in this country that allows our businesses and workers to win in the global competitive game at the moment. we have extraordinary accents in this country. we have a highly educated and motivated workforce that in many respects outperforms, from a

product to the point of view, workers in virtually every other country. we have the most efficient capital markets in the world. industry we have great natural resources as well. there's a lot to be bullish

about in the country in terms of our economic opportunities. but this fiscal deficit our fiscal policy is an enormous cloud or retardant on us reaching that potential. you know, i work in the investment banking industry, i used to be in the money management industry. there's a phrase that sometimes get applied to companies and you would say about the company, good company but bad capital structure, and maybe bad management as well. that was used to describe a company that had, you know, great products, highly motivated work force, that was winning in the eyes of the consumer or whoever the purchase or products were. they maybe had too much debt or they had a management team or structure that just didn't take advantage of the enormous opportunities that they had in front of them.

i think we've perilously close in this country today to the phrase great country, but with a bad balance sheet and a bad manage structure. that is the core of the fiscal issue that we face here in this country today. why is that a concern? if we don't address this, we will be effectively prevented just like an overleveraged company is from making the investment in, you know, infrastructure, in education, in r&d, that are the key to us winning ten years from now, twenty years from now, thirty years from now. which ultimately are critical to sustaining a high level of growth and employment in this country. we'll do a second thing, which is even some respects more

venal, we will saddle or children and grandchildren with the responsibility for paying off or paying down the debts that we incurred because we wanted a level of government but were not prepared to pay for that level of government. and so it's a really critically important thing, as i think maya and bob said, and lou as well, i haven't met a single, you know, democrat, republican, even socialist, we have a couple of those in the congress as well, or independent who doesn't have a clear idea how this shift -- what the answer is. it's frustrating for, i think, many of us who don't spend a lot of our time in washington that we're not getting to the point

where it's so clearly we need to get. because we don't get this behind us there are three massively important issuing to addressing our competitiveness. corporate tax reform, individual tax reform and entitlement reform. it we don't get a big start in addressing our fiscal can issues i think we're going miss the opportunity to address although of these issues. let me close with one comment, lou referred to the importance of competence in the growth and investing and, you know, run a business like bob does and you have the uncertainty of the fiscal cliff and the uncertainty about the distribution of the economy, -- direction of the economy, it makes you a little bit more cautious about investing and little bit more cautious of hiring people. if we actually do go in to a

weaker economy, so you to reverse course and you have an intense pressure on your earnings. so this whole issue of, you know, confidence in our government structure and the confidence in the ability of washington to address these critically important issues is pretty fundamental to, you know, our economic growth and to our the success of the real economy and certainly gets reflected very quickly in the capital markets. we saw in july and august of 2011, that a sloppy job here in washington has pretty profound effects on the performance of the real economy and, you know, hopefully, i mean, i must say i look at some of the discussion around the debt ceiling discussion, around the debt ceiling extension, and i share luis view that, you know, that

this is really the height of irresponsibility we're significant here discussing why the united should default or not on its debt, which is debt that has been incurred as a reabsolved of spending that hasn't been approved by both bodies of congress and signed by the president of the united states. there are 535 members of congress, i assure you that not a single one of them, if they were confronted with a credit card bill they didn't like, would simply say i'm not going pay that. because they know that the implications for their credit rating the access to future bank loans would be effective for ten or fifteen or twenty years. it's kind of appalling we're sitting here discussing whether we would do it with our country

we're so incredibly proud of. >> let me -- my last question try to be a little bit provocative. folks like allen, very well with respected economist peter diamond and nobel prize winning economist, and i'm blanking "the new york times" -- who is clearly identified on the left but influential. now they basically say just seeing the problem wrong. we have to get the economy going again. if we can get the growth we need command, we need growth we have to do something on infrastructure. we have to spend more on infrastructure. the worry about the deficit for the next two or three years is a mistake and business would respond if we could get going again. what do you say in response to that? >> well, i say like many things i don't completely agree with.

there's a kernel of truth. [laughter] >> i think the answer is i said a number of times i think what we need is the three b.'s. needs to be big, which means $4 there trillion or more. it needs to be balanced, which means i think the consensus is one 1.2 trillion of revenues and three 2.8 to $3 trillion of expense reductions, and the third thing is back end loaded. which is sensitive to the fact we're still performing well below potential than we need make some investments to stimulate our competitiveness. it's embarrassing as a country we're somewhere in the 20s in educational achievement. it's embosserring -- embarrassing the degree to which -- you go to many other countries we used to think of as developed cunning and the

infrastructure and, you know, roads and, you know, train systems are better man ours. -- better than ours. that's the kernel of truth, but there is no road to a competitive successful united states ten, fifteen, twenty, thirty years from now that doesn't strongly address the deficit issue we have. >> i'm -- let me try and remedy that by taking one or two question frlts audience. yes. could we get a mic there. could you identify yourself, please? >> good morning, i'm ron williams. i'm retired chairman and ceo of -- [inaudible] a couple of comments and questions. in business strategy follows your budget, and i'd be interested in comments around getting strategy right and getting the budget. the second question, really is a question about alignment.

and the question is is there any combination of structures that make it so if we don't have a budget and we don't have an approved deficit level, we don't pay congress. or the president. it's pay for performance. [laughter] i'd be interested in your comments on that. >> anyone like to tackle that? that's an intriguing thought. [laughter] >> i'm jump in on the first one. i think it's so important. when you think about what we need to do, and we know we use $4 trillion as short hand. we know we need a deal around $4 trillion or stablize the debt and put it on a downward path. it's hard to do. it's not sufficient to fix the problem. i think you heard that through the panel and you hear it whenever you hear policy people talking about it's not enough to get the fiscal situation under control. you need the right fiscal policy or right budgetary policy.

what is astounding in the country, let's start with the fact we don't have a budget. the way the federal government operates without putting a budget in place is beyond any of us. but the fact that we don't use as it a opportunity to pick the national priority. what the most important things for the country do, what the best ways to do them? should government do them? should it be at the federal level? the state level? you can tell i went public policy school. these are the things you do and come out and realize it's not how you work. you don't go through the exercise of national priorities, figuring them out, and assuming they are important enough to do. you pay for them. i think ralph's spoipt clear. you need to pick piratety that have long-term growth and exeat itiveness among other values leading them. you need to pay for them. it's unacceptable to one, fix spending policy that don't achieve the goals and hand the bill off to the kids.

i keep trying to explain to my kids that's what i do to make it interesting unsuccessfully. but you can't explain it in any way that makes it acceptable. and quickly to your second point, you know, it's obviously gimmick, it feels like this is a moment we need the gimmicks. we have such frustration and particularly those who have run companies have such frustration that we hired a group of people to come to washington and the amount of energy that goes on two teams -- beating each other up instead of solving a problem no matter how much we might disagree on the role of government or the perfect way to solve it. we know it has to be solved seems unacceptable. there's the moments where you need the no budget no pay or the gimmicks. if nothing et. cetera to focus attention within i have to work ton to get it done. >> i like the idea. lower the base pay and gate bonus that depends upon the performance. that's kinds of attractive.

yes? >> write mitchell report. i want to follow on another thought. ralph captured it when said great country, bad balance sheet with and it seems to me that if there's any lesson we get from this panel and other discussions is there is a way to fix the balance sheet. it's not clear that there's a way to fission governance. and the first panel mayor fisher talked about moving at the speed of business. and so this is a question for mr. mcdonald. in an earlier life, i competed directly against your company in the advertising business in a category that at that time we were pretty successful at. which was the mouth wash business. one of the things i learned

about proctor along many others, is the marketing plans were three pages long. and it occurred to me that if the arguably the world's largest most successful consumer product company can direct the product managers to put their annual market plans in three pages, that we might be able to take some of that magic and instead of having a 2,000 some odd page health care bill or another bills of that tim pawlenty nobody reads, -- that nobody reads there's another place where the business community might be able to have some influence on the third problem that he talked about. which is bad management and govern governance. >> i think you raise an interesting point. we spend a lot of time training our new hires in thinking up front so that they can disstill

their thinking to the one page, two page, or three page memos. i'm interested in requesting maya what she learned in school about creating policy. i almost think there's some pride taken in the longer and the more complex the better. i don't know. but certainly the longer the more complex, the less principle because if you can deal with principle, it can be shorter. you don't have to think about every single executional detail. i think what we miss because ron -- as ron suggested we don't have a strategy and the budget is not following the strategy. we're dealing with execution rather than principle. so i agree with your point very much. i would like to comment. >> i'm going ask lou to -- yeah. >> with that two points. first of all, i think more attention to the quality of

management, the training, and development of public managers in government sees personally -- especially people that devote a large part of the career to public service, i think it's an important subject. i think some of you may be familiar with the partnership with the public service and devoted to that cause. essentially the only organization i know of that is. we have many talented career public servants in this government. we happen to have had in this administration both the first treasury secretary and the nominee to be the second. both of whom who essentially spent brief interruptions their entire career in public service, and match up with the best of the publicker is varcht the i

think you found anywhere in the world. i would say the same thing about the current deputy secretary of state. completing thirty years in public service and one of i think of only a couple of career foreign service officers to rise to the rank of deputy secretary. but we need put more energy and resources in to the development of the public sector career. i think the other point which is more troubling and there has been a lot of commentary. we have to recognize there have been changing in our political demographics. partly as a result of district and as a result of changes in the country that have pushed more of our elected legislators toward the extreme end.

more concern about the challenge coming to them. more and more districts are essentially single party district and the political threat to an incumbent comes on the right flank or the left flank. depending on the party. it creates a foundation for the intense partnership and division that we see. technology, money, in politics, transportation, availability all of that adds to it. my first job after graduate school was on a senate staff, and presidential campaign that came out of it. in 1967, '68 and the first thing the senator kennedy said to me and the first day i started in may of 1967 and junior member of the legislative staff -- he was

going to set up a series of meetings with some people with whom he disagreed about a lot of subjects. but loved the process. for the first couple of weeks i got to spend timen on the democratic side with senator long and russell. and on the republican side with senator dirkson. i think i come from that kind of experience doesn't happen very much anymore. it's one indication of the change. somehow we need more people and more thoughtful formings where those kinds of issues that effect our political process are discussed as well as substantiative issues.

>> at the back. we'll have to wind it up. my name is paul. i'm a communications and marketing consult assistant. and the name of this panel is deficit reform. resolving uncertainty and promoting innovation. i've heard a lot of discussion resolving uncertainty visa what the government's responsibility is. what congress should be doing, what the president should be doing. but i haven't heard very much about what business should be doing in terms of innovation. i would present that question to the panelists. >> i'm not sure that's right. i think the panelists have commented on that. let me make this the final words for the panelists. we'll start with the the far end

let bob go first. >> he runs a bigger company. >> i try to talk about that. but i couldn't agree with you more that innovation is in many ways the solution to many of our problems. there's a wonderful book written by man named matt called the racial optimist. he's british. and in the book he talks about innovation solving the majority of the world's problems. what is gotten us here today. and you remind us that back in the mid 1800st those people who lived in the u.k. at the time thought we were going die under heap of horse manure because the number of horses we needed. that department happen because the invention of the automobile. and the invention of the automobile sparred other problems. i think innovation is the solution that is and why we spend so much money trying to improve people's lives through

innovation. the way to get that done is by having the best schools, by having competitive schools. we have to have competitive education. most of our international partners are educate in the united states. some of them would like to stay here. unfortunately when they graduate they can't get the visa to stay and they have to go back. so education and the infrastructure is certainly one thing. i'll stop there. so other panelists can comment. >> yeah. i couldn't agree more with what bob said and gist 6 your question. at the end of the day, you know, as i said a little earlier, for america to achieve what it is capable of achieverring from an economic point of view. it's fundamentally dependent end upon our ability to innovate and to create and to invent. i think what we want a

governmental system, i believe, i don't mean that as business. we should all want that. that effectively allows business to do that because ultimately that is how we will create more jobs and more economic output here in the united states. but that does that in a they is respectful of the populace as whole. we need the environmental protections, we need the safety productions, -- protections we need the licensing approval of drugs because, you know, none of us individually are capable of, you know, ascertaining the safety and soundness of those individual products. but having said that, we win as a country if we're fusing government to play the role as a protecter of those things that we're expertise is required, but that we then allow the more

unfettered investment in our people and in our innovations to win. if you look at the industries where the united states is winning globally, they are almost all industries where, you know, technological or, you know, sensitivity to consumers deeply researched consumer needs, i would say our financial industry is an industry where, you know, we're winning globally and, you know, i agree generally with luis comments about the regulatory environment. i think we have to look at that also to make sure that we're not rendering an industry that we're winning in around the world today to be less competitive. >> any last comments? >> sure. i was thinking about the questions that came up, and the comparison about business and public sector and what either could be learning from other. and i was thinking about in the public sector how we just don't

-- your first point. we don't start with what your objective is. they are things you would do if you're running a business. what your objective and how you're going to achieve. building an operation that works to achieve. if you look how government is organized, it doesn't make sense in so many ways it's completely compartment lose where we need to be problem solving. the operation you use to achieve the goals and the evaluation piece. we never spend any time figuring out what works and what doesn't. and using that and funnel back in to change things or or redistricting our resources. but you don't want to overstate the comparison. there's a bottom line in business. there's not similar bottom line in government. it's not as if you can run public policy in the exact same way. they are things that the private sector can't do in many ways. i think there's so many useful lessons about how -- we can

improve government and you don't want to overstate them. then i was thinks about the fact that the enelevation problem is true in government as well. i think the same broken system in government that is keeping us from solving problems that we know are there, and i always come back as seeing baip as part of the fact but the two suedes u would beat each other up than come up with the answer. if we were able to find a way to be more innovative in government fen what you coin a think tank to have the work in the political system and have more partnership with the private sector and solving the problems, this country would be moving forward so much further and faster. i'll come back to where i started. the fiscal problem seems like it's gumming up the wheeps -- wheels of everything. and there's no reason it's not okay to disagree on what the priorities are. how best to get them. but if we are breaking our system that allows government to

financially furchtion at all, we will not get to my of those discussions. and shame on us. we end up not being where we are for such a tremendous next couple of decades we choose not to make the choices that allow us to go forward with those. >> i think the value of investing in innovation and i would add talent management to that. nothing is more important. proctor and gamble is one of the leaders because of it because of the priority and bob and the predecessor have attached to that. coming directly out of the financial crisis we established innovation centers, fettered to the -- [inaudible]

we're seeing an exfor the record their value in that and other lesson time i spent in and around the every investment you make in town and every level of the talent chape. every aspect of talent management is about the best thing you do with that amount of resources. thank you. >> you made a great segue that gets us the last panel. you talked about innovation and government and improving government performance. that's exactly what we are going to talk about with darrell's leadership after lunch. and so we'll look forward to that panel. i'm a believer you get -- efficiency gains. this has been a terrific panel. my thanks to everybody on the

panel. [applause] and we'll see you. have been talking about the dream he had. he talked about it for years. the american dream. and it become his dream and he had done in detroit just a few months before and he had talked about, you know, i have a dream, and america will someday realize these principles and decoration of independence. so i think he was inspired by that. sunday on after words he recalls

his journey adds a civil rights activist participating on the march of washington in 1963. you're watching c-span2 with politics and public affairs weekdays featuring live coverage of the u.s. senate. the supreme court will be deciding case of missouri v. neely. the missouri state supreme court decided a case in favor of tyler mcneely saying blood drawn

without the consent was inmichelle in a criminal case against him. the supreme court heard oral arguments in the case last week. the audio recording is an hour. >> well hear argument first this morning in case number 111425. missouri v. mcneely. mr. ceaser? >> thank you. mr. chief justice, may it please the court. in the course of a drunk driving investigation within quickly securing blood-alcohol evidence with as little delay as possible is an incredibly important. >> how come it took so long for this state to figure out that it needed to do this without a warrant? >> well. >> officer testified that he's been making deng driving air forces for years. >> yes. >> i think in only one circumstance did he need do it without a warrant. so what made the need here

imminent in the sense of impractical to get the warrant? >> well, back in 2003, there was a appellate court case from missouri that dealt with the importance of the word . >> no. i understand why he decided to do it. to forgo getting a warrant. is this testimony case he time to get it? >> your honor, that ignores the fact that had had he sought a warrant, there's no question he would have been able to secure a warrant. the issue was it was going to take a considerable amount of time. >> but so -- a considerable amount of time for the years he did it? it. >> that's . >> that's true. >> he didn't testify to it it causing loss of any particular case. >> but in this particular case, it was going to take ninety minutes to two hours to secure the warrant, during that period of time, the most probative

evidence was going to be dissipating and going to -- but he said in the case as he said in the past, i encountered no difficulty getting a warrant in prior cases. there was nothing that distinguished this case on the fact of the other cases on the fact. >> that's correct, justice begins berg, he never had a problem securing a warrant. but there was a delay. and that's the difference. we're looking at delay, and quickly securing blood-alcohol evidence is important. because the evidence is being lost at the significant rate with every minute that passes. >> what constitutional right exist farce state to get the best evidence? >> well, justice society sotomayor, i think that's something we should strive for to be able to get the best possible evidence in a case. >> no. you the state, want to strive for that.

but what in the fourth amendment cob templated -- contemplated that's a right the state must have. it has to get the best evidence it can. >> the touch stone of my fourth amendment analysis is the reasonableness of the search, and the -- how can be t be reasonable to forego the fourth amendment in a procedure as intrusive as a needle going in to someone's body? i say this because breathalyzers, in my mind, have different intrusion level. they don't intrude in to your body. and i think almost all jurisdictions use breathalyzers instead of blood test. a small fraction that use blood tests. really -- ruling by us today is going change that.

in your favor. it's going to change that and put a sort of a print the court's print on. use the most intrusive way you can to prove your case. >> and justice, sotomayor. i would disagree with that. if the the court rules in our favor, i think the end result will be more people agree to take the breathalyzer test. in this case, the arresting officer gave the defendant an option to take the breathalyzer test and when he clearly told him he was not going take it. he decided to take him to the hospital in order to draw the blood. >> why continue you force him to take the breathalyzer test instead of having a needle shoved in the arm? >> who is the difference between the reliability or the acceptability by juries of a breathalyzer test? as opposed to a blood draw? >> justice ski will, both test reliable.

we rely on the breathalyzer test on a daily basis. it's difficult to force a drunk driver to take a breath test. they measure deep breath air. one police officer told me it's sort of like you can put a balloon in front of somebody's mouth. you can't make them blow it up. it's difficult for practical reasons to force someone to blow in to the breathalyzer. >> if we're talking about reasonableness, do you think it's relevant for us to look look to the rules and practice of other state? >> justice kennedy, there are twenty five states that would be opposed to the warrantless blood draw issued in the case. as i point out in the reply brief. fifteen states have joined amicus delaware. >> but the fact that the states do have a warrant requirement,

and what question best tell make it work very well including some expedited procedures where you can get warrants in minute. it takes the plam twenty minutes to get to the hospital or police station anyway. if we see that other states significant amount of other states require the warrant, and too many have expedited procedure. does it bear on our determination of reasonableness? >> i don't believe it does, justice kennedy. in virginia -- individual state laws do not affect whether or not this activity was reasonable under the constitution. >> but we have always -- correct me if i'm wrong. i think we have always fourth amendment reasonable to stand as being a national standard. suppose forty states, suppose forty states had rules and

warrants and many of them had expeditedded procedure. that's irrelevant? we don't look at it? >> i think the court's decision in sampleson v. california is -- they approved suspiciousless searches parolee. i think a sleys majority of state disapprove that particular law enforcement practice. that doesn't bear on the issue of whether or not that violates the fourth amendment. not have permitted it because they were under the mistaken belief it was unconstitutional. >> i suppose that is a possibility, justice schee ya. >> the in the states is lower than in the states where the to take . >> your honor. i think the national district attorney association cited a

study. i know, the respond et cited a study. it doesn't have any bearing. it's clear if you have concrete evidence of drunk driver's blood-alcohol content, concrete evidence it gives you a far greater case far greater chance of securing con conviction and -- . >> the new rule is we have to shrink the fourth amendment going to be suspended. whenever the prosecution can't get the best evidence to make the case? >> no. justice sotomayor, i think as long as a police officer has probable cause with what we're saying objectively. . >> probably cause is not enough. i think it's the main rule that if you can get a warrant, you must do that. the probably cause is truly not

enough we never need a warrant with the probably cause. >> you are right. probably cause is not enough. probably cause cupped with the undisputable fact that alcohol is eliminated from the body every minute that passes. >> suppose instead of waiting two hours, there were procedures in place in missouri indeed across the country where it was possible to get a warrant in the circumstances within fifteen or twenty minutes. would you still be saying that there is a sufficient -- to avoid the warrant requirement? >> i think it's a particular jurisdiction perfected the warrant process to the point they can routinely obtain search warrant in fifteen minutes. i think we would have a different outcome. i think it would effect the analysis of the case. with u the due respect to the hypothetical. it's a time consuming process to obtain search warrant.

>> why can't you do that? the only virtue i see in saying so you to get a warrant is the officer picks up the phone. there's usually somebody on duty. he phones in and says i have a drunk driver here, he's wobbling, he can't cross the center line, and he won't take a breathalyzer. i want to give him a test. you have a second judgment, and the officer has to talk to somebody. he a little more careful. and that's a protection. not necessarily for the person but a protection for others who may be worth wobbling. i think it's the question you're being asked. -- what is the problem with doing that? which adds a little bit of security this that this warrant is really -- that this is really necessary. >> i think an impractical application it's going to be more of time consuming process to obtain the search warrant. >> how long would it take know

say that? it took me about thirty seconds. so even if you're a lot more careful why would it take say more than three minutes? >> to obtain -- you have a system and phone -- you do what i said. the man and or woman who is not a policeman. the man or woman is trained listened to policeman and other say things and try to pin them down on the bed and make an independent judgment. so why would it take more than five minutes? >> justice breyer, that's why i drew the analogy between the telephonic search warrant approved in the 1970s. it sounds it would be an instay contain use procedure. some of the lower courts that have actually examined the process, they came to the conclusion that it's still a time consuming process. >> in most jurisdictions, unless i'm mistaken, it cannot apply for and get a search warrant. he has to go through a

prosecuting attorney or someone in the prosecutor's officer first. it's not getting ahold a judge, it's getting ahold of the prosecutor first and getting acold -- hold of the judge if the prosecutor approve it is. >> that's the case in missouri. the . >> and in some cases i suppose the judge actually want to read the of -- search warrant in three minutes, it would essential belie a rubber stamp. >> you have -- we have, i think an indication that there are jurisdictions that do it inside a half hour. >> that may be true. >> do den -- [inaudible] fifteen or twenty would be a different case. i'm wondering you would draw the line? >> that's a difficult question to draw a bright line for an exactly when we would draw the

line where . >> so the importance of the search warrant suggests as a constitutional right suggests a we should judge reasonableness by the people who are the least efficient? or by the people who are the most reasonably efficient? >> justice, . >> meaning people police jury dictions? >> and the of course local law enforcement practices are going vary from jury diction to jurisdiction. >> absolutely. should we commit them to vary in turns of inefficiency or be encouraging them to vary within a reasonable range? >> i think prosecutors are going strive to obtain search warrant as e officially as possible. but whether or not this was a reasonable search does not depend upon the local police practice. if there are no further questions lilled toik reserve the balance of my time. >> they intruded on your

rebuttal time. we'll give you little extra. >> thank you. mr. chief justice, may i please the the court. we are facing -- every minute counts and the reasonable for the officer to proceed without a warrant. i would like to pick up the the court's questions lead off. idea we might live in a world where warrants could be gotten so quickly there is not true -- first of all it's not stateable in the now. it's there's variation from juries depiction to jurisdiction. >> once we say you adopt need a warrant, you know, even if things improve, it's tsh right. no. >> i don't think that's true at all. the police do not vsh --

somebody can come up and say you approved it ten years ago without a warrant. things have changed. you need one. >> i think if the world changed so every police officer had an ipad and judges on duty and the warrants could be gotten that quickly. you would consider that and the oh sources of delay the time to get to the hospital and et. >> yes. >> if that's the case why shouldn't that determination be made case by case? >> because . >> case by case whether in fact it would have taken that long to get a warrant. if it would have taken too long, then it's okay without a warrant. if it wouldn't have taken that long. it's bad. the question? >> the circumstance. >> right. but the totality of the circumstance with respect to the direction of evidence. what the police are witnessing. they know there are certain destruction of evidence what they are weighing it uncertainty whether there's time -- they have no idea what the blood-alcohol content is. they have no idea how fast it's

decreeing. >> what about saying they should try. a number of jurisdictions can do this within a half hour, say initiate process, while you're going to have hospital, when the half hour is up, you proceed. but at least it's been an effort. >> i think there are legal . >> i think there are legal problems with that impractical problem with. the legal problems the the court never suggested the police are simultaneously and require a warrant and not require a warrant. >> we have one -- because you have a multiple answer. on that point. we talk about circumstances. and if we proceed as justice ginsburg's suggestion indicates, then the fact you can't gate warrant within forty five minutes is the circumstances. >> right. i mean, in all of the destruction evidence cases doubter said if there's destruction of evidence we're not going to make until half is destroyed. that's the rule they want. >> they said thirty minutes.

>> right what i'm sighing is the practical matter ting would be difficult to suspect the nationwide folks could get warrants in the circumstance. you typical have one police officer on the scene making the stop asking the person questions, taking them through the test nap would have to be the officer who would do the of . >> they have ab incentive to get a warrant. even they we were to say they don't need one. they certainly have a strong incentive to get warrants because it insulate the searches to a greater degree for a later challenge. and a suppression hearing. why couldn't they depend on the practicality in a particular jurisdiction? not every jurisdiction has a prosecutor's and judges who are staying up and 3:00 in the morning on sunday morning waiting for the phone to ring or for to receive some sort of an electronic message that there's been a stop and somebody wants a search warrant.

maybe, you know, being jury dictions can do that. small ones can't. if you're in a big jurisdiction, or one that feels they can afford that, then why should, you know, why should the fourth amendment permit the search to take place without the warrant? >> well. it. >> it could have been obtained. >> a couple of this the court makes nationwide rules. the question whether it's reasonable to do it in missouri or here. but second qlowrn why the idea with respect to should matter based open time get a warrant. it's something they have never done. it may be the case that a court looking backwards could say you had enough time. if the police officer where he stands with the person he knows one thing for sure nap evidence is going to be lost and it's critical evidence. it's not just to get above.08. you have the laws. >> we often said that you look whether or not you can get a warrant before you break in so the drugs respect flushed down the toilet.

we make that judgment all the time. >> right. >> and shoe is not made. you gate warrant. i think it's quite incorrect to say we don't look at time factor. >> i think it matters . >> the time. >> i think it matters at general matter whether warrants take time to get and evidence lost. the court never gone jurisdiction to jurisdiction. it never second guessed the case. i the court -- we're not going make them use the less restrictive way. we're going ask what they did is reasonable. >> i agree there's a uniform standard. and i i don't know if you did finish the answer to justice begins berg. she suggested we have uniform rule of circumstances. her suggestion complies with your objection. >> if i'm understanding it correctly, i think our point is this. the police officers have to act reasonable flit situation. think know the evidence is going to be lost.

every smnt critical. >> so many situations in which we require a warrant nevertheless. when there's drug dealing in house every time people enter the house. it's almost a certainty that they're going to use the drugs an that evidence is going disappear. you rely on hope on knowing there is likely to be telltale signs left over. that's the same thick you do in an alcohol situation. you rely on the testimony of the police officer, you rely on the implied consent presumption. it's not as if the destruction of all evidence. >> and . >> not like a fleeing situation where someone gets away you have nothing left. this is vastly different. >> with respect we degree. the evidence is critical and number matters. i mean, it's the case that blood-alcohol evidence is the most important evidence the

court recognizes several cases. since since the law changed to make it more important. >> you mentioned -- [inaudible] why did the court go through all the made it much shorter opinion by simply saying blood-alcohol dissipates. it didn't. it pointed out that in that particular case, there was a delay to investigate the accident, the person had to be taken to the hospital for care, so how much time elapsed? i think it was two hours, wasn't it? the court made a mention of two hours. it was not a critical portion of the analysis. we don't think it matters. because the court said first there was clear probable cause in the situation. >> [inaudible] and why it was it in the opinion? >> it's one line in the opinion. if you look the court said we're told the percentage of alcohol

in the blood englishing quickly. they eliminate it from a system. time had to be taken to investigate the scene and take them to the hospital. >> it means there's an extra thing. it doesn't mean the first thing wasn't enough. if there was uncertainty. >> it was enough either. >> that gives me the second point. they relied on the destruction of the evidence being enough for circumstance. i would point the the court to look at skinner at second degree and win -- the court has not said anything about the person going to the hospital and investigation. >> they tell us that the breathalyzer is just as good than in fact he expects the consequence of our ruling in his favor of the case. will be that the drunk drivers are will agree to the breathalyzer test. but i don't know why it isn't

adequate to produce the result simply to put the drunken driver in a paddy wagon and on the way to the hospital say, you know, we're going to be in the hospital in twenty minutes, we're applying for a warrant with we get there we're going to, you know, stick a needle in your arm. unless of course you agree to take the breathalyzer test. why isn't that enough to force them to the breathalyzer test? so they will blow up the balloon. >> thattuation i think they're willing to take the chances the leafed dispay below the standard and be able to challenge it as opposed to they gave the evidence they potentially wouldn't be able to challenge it. i think the point that -- [inaudible] >> maybe they are drunk. [laughter] but, but, justice scalia, raise as point. you have some delay. unless you're talking about sticking neegd in somebody roadside. so you to take them to the hospital. there's going to be some amount

of time, which you're going lose. and why can't you use that amount of time if you can to try to get a warrant? >> i think there are two answers. you typical practical matter have one officer on the scene proceeding. he has to prepare it. and consult with the prosecutor and drive to the hospital we don't want him texasing during driving et. cetera. the second is the legal answer. the court has been hesitant to second guess the police in the circumstance and say when the police are in situation they have to say try get a second officer on the scene. >>ic you should be fair. he doesn't to prepare a written one and number of the state telephonic warrant. you . >> even some telephonic warrant spread your. -- procedure you have a written document and you read it to the judge and a record needs to be made. they consider this and said it sounds like it won't take long. it turns out they take awhile. it's not just the time to get a warrant. it's the initial time taken at the stop. the investigation, the field

tests then the time to get to the hospital. sometimes they get to the hospital and not given first priority. they are waiting at the hospital. >> [inaudible] is it okay to let police officers take the blood? >> we think that's a different question one the court reserved. they said there was a medical personnel and medical setting takes blood in that case. it's the same thing happening here. if we had a different case we would ask whether the situation invited an injustified element of infection and pain. we think they should gaecot r on it then a make a determination. >> if we rule in your favor we will. >> i'm not sure that's true. the reason that a few states have considered having police officers get trained in the way is bakely out of necessarily. it's rural jurisdiction it's too much to get to the nearest hospital. it's fair to say they don't want to be in the business of taking blood. it diverts them from the other activity. it's an extension i have

training process. it's not something the court has to decide. >> in the rural places be stopped without a independent imagine stray -- magistrate. what i'm saying there are only a few states a doing it now and i think it is should be the court should wait until it has a record to make the determination. there has been training something that the department of transportation helped them investigate whether it's a option. the police officer are very far away from the nearest hospital. it's based on the concern about the destruction of evidence. >> you're going back to the question. they take a breathalyzer is there a reason for a warrant for the blood test? >> yes. you tbhowltd need to obtain a blood test practically. the evidence is not the same. but, you know, substantially. ed the blood test is better you have a sample that sticks around and you get two samples the

defense can test it. it's better evidence whether it's acceptable to challenge. they con stoant a breath test. they say they will but they can't. there's another case not the fact here. something we want to be careful about is driving under the influence of drugs. they don't show up on a breast test. the police officer might have good reason to believe the person is under the influence. they might take a breath test. all the the court needs to do is resolve the case is say where they refused it the exact fact. it was reasonable for the police to say we know the evidence is going away. we know it's going to be lost. maybe question get a warrant quickly or not. let's go ahead and proceed. >>let talk about the losing evidence every second. i suppose the same thing could be said in other alcohol-related

climbs public drunkness, under age drinking, you wouldn't be making the same arguments there or would you? >> no. the question you'd ask would be the same a reasonable balance test. i think the government interest would be different from the ones issued here. the court hear that the drunk driving is public safety problem. one person being killed every 51 minutes. >> you're saying that there should be a way of the cost and benefit here. >> yeah. they did that earlier. they look at the need for the evidence in the case is suspect just the court would not think of strong as the evidence here. get back to the questions about the time get warrant. evidence they had before is take how far are hour and a half to two hours the once officer said he could get in touch with the

prosecutor and judge. he didn't quantify how long. >> the time of the two hours from the time of the stop or put in the back of the car do we know? >> it's not clear. i think it's two hours total. there was also an exhibit that the defense put in that knead look like one and a half hours to two hours total. i also . >> you fish. >> one other piece of d.a. which is a study that referred to the in brief where folks in four states warrants tried to get them as quickly as possible. ..

the dryers offers the opportunity choice of breathalyzer. this client is authored to breathalyzer and declining twice. but under mr.'s proposed rule, there is no rule at all. the decision whether individual can be required to submit to not think of a blood drive off in a handcuffed him physically restrained as my client was good >> what it boils down to in my mind is yes of course it would be better to have a new troopers in here with the policeman has to say and to actively assist in judgment on that.

it would make it less likely that people who are anything in fact have had this happen to them. if they are viewing that's a considerable burden in many, but not all states. and at some point, and the addition in respect to the second judgment, namely the matches traits that you get is not worth really what you're going to lose, which are going to be people trying driving around on roads and possibly killing people. so at some point, i wish he would spend some time at tracing that practical argument. >> i'd be happy to answer that question right now. your honor, there's two responses. one is misery case specific and what is more generic because it's important to remember they are not simply asking to reverse suppression motion on the grounds to factor this case case may have reasonable to give blood draw.

what misery of the united states urges a category requirement cannot give you ui cases nationwide. >> is the thought of standing fury signifying nothing quiet what advantage do you think your client would really good from the work requirement other than the delayed but that would entail, allowing his blood-alcohol to reduce itself. for some warrant, let's say a warrant to go into a building where the police contend there may be trucks. the policeman will, magistrate, whatever, give it to search? two weeks ago we had this informer. all sorts of different factors. in these dui cases, it's always going to be the same thing.

it's going to say well, his bright spot of alcohol. but gave him to walk a straight line a turnaround test. the fund did, he couldn't touch his nose with his index finger. what is the impartial magistrate possibly going to do except to say hey, that's probable cause. are any of these warrants ever turn down? are they ever turn down? >> your honor, i do not have the answer, but it's also true, your honor the words in general are rarely turned down. the overwhelming percentage of requests in all criminal cases are granted. >> there's a lot of judgment that has to be brought to bear. this is a reliable informant? how long ago did he tell your source for where in all these cases is the same thing. it's the sound of alcohol. you could walk a straight line and that's the probable cause for fantasy at the independent

magistrate is going to do a whole that a good except for the fact that it will delay the process. >> this entire jurisprudence rests on the proposition that privacy safeguards of the fourth amendment and if it are having a detached magistrate review before the state to something as intrusive as putting a needle and somebody saw him. >> we have some forms in the joint appendix. for the officer to fill out. he checked certain boxes in the senate select, clay to a magistrate and if the right boxes are checked, the magistrate will grant the warrant. do you think that's consistent with the fourth amendment? >> something close to it this earlier diaz. the prosecutor has prepared standardized forms, which the police officer fills up reprehensibly prosecutor in the magistrate decides whether to grant the warrant.

that cuts in exactly the opposite direction, which is the process of the warrant does not elaborate and need not be timely. i can imagine an answer to justice scalia's questions circumstances in which an officer might apply for a warrant a station where they've not asked to go to the field sobriety test. beside the driver, going 10 miles of the speed limit. i questioned him. his speech was slurred, i i seem bloodshed. i wanted to play tennis. the magistrate in that circumstance may say, do you chew a perform field sobriety test? >> what about the field sobriety tests. suppose the suspect was apprehended and suspected of being drunk. since i'm not going to walk a straight line. i'm going to just sit here. you can't make me do anything without a warrant. if the defendant doesn't consent, and do you need a

warrant to have the standard sobriety test? >> do you mean to you in a warrant to the field sobriety test comments at the question justice ginsburg? i don't think you need a warrant to require somebody to put his finger to his nose or walk a straight line or stand on one foot. i would not state that is a search within the meaning of the fourth amendment that triggers the work requirement, but there is no doubt putting a needle and somebody sounds triggers a warrant requirement. >> what about a breathalyzer? >> i think you probably do need a warrant for a breathalyzer, your honor, but missouri's position is he not only to be to work for breathalyzer come you don't make it work for. >> i know what missouri's position as i know it's not a breathalyzer test. if the logic of your position

list of requirements at a warrant for breathalyzer, that would be pertinent and analyzing your position. >> i think your honor i would say requiring somebody to produce, to breathe into a machine in order to gather evidence is a search that should trigger the warrant requirement, but it is certainly less intrusive, your honor, certainly less intrusive. >> taxpayers consider them of reasonableness. i don't why why you want to bite off more than you can chew. let's reasonable for sticking a needle in your arm is not necessarily reasonable for asking you to blow up a balloon. >> your honor, i want to bite off this little essay can chew in this case. there were two salient facts because it's important to focus on what is before the court in this case, a warrantless blood draw. the two salient facts are case specific. you have a state trooper here

who has been doing this for 17 and a half years. he testifies at suppression hearing still required to seek a warrant fewer than 10 times. why is that? the overwhelming number of drivers in fact give their consent and in the 10 cases over the 17 years very had to seek a warrant, he testifies he never had any difficulty obtaining a warrant and no indication those for in any way interfered with the state's ability to cases. >> mr. shapiro, can you tell me, what i am deeply troubled about in your argument is to intend the totality of the circumstances is taxed, but with circumstances as the court actually looking not to determine whether foregoing the warrant was necessary or not under that circumstance? we know one. we know where totality has occurred or serious accident because presumably you secure

the scene and take care of injured people and whatever else it is. but i'm not sure what other circumstances under your theory would really justify a court view those same, you know, get a war here. can't be because it takes a lot to get a warrant because that shows inefficiency is part of my question earlier. >> i think the court got it right inch arbor. other facts that are beyond the control of the police that significantly in either the ability of the police to initiate the warrant. >> you're in a world jurisdiction and it takes a long time to rest a prosecutor and a magistrate at 3:00 in the morning to get the warrant. he would say that's too bad. the whole country has to

operate. you have to have somebody on duty all the time. >> your honor, a rural county in southeastern missouri. >> i'm asking a hypothetical question. i bet there are places like that. i've encountered federal magistrate judges who were on receptive to receiving warrant applications in the middle of the night. that is known to exist. suppose you have a jurisdiction like that. does that count as a circumstance that would justify a warrant was taking about? >> i would say no, your honor. i don't think the ci to take advantage of its own failure to expedite. >> supposed to magistrate is unavailable because he or she is though. >> is a different situation. we should but she agreed that the next circumstance to allow it walk the split sample? >> i think it might well ask there is no alternative magistrate. >> that's a separate question.

one of your argument is you need individually circumstances. you can't have a per se rule and now this other set of questions about what you care to count in totality of the circumstances test 378? so one could disagree with you what you think is justice alito, justice kennedy suggested, you know come you do take into account it's the middle of the night in a rural county and it's going to take two hours. they still think that's the analysis you have to go through. >> that's correct, justice kagan. the second fact i want to, to what came up briefly in the opponent's argument is we know that there are have to say for the country by your account 26 states that by statute that prohibited warrantless blood draws and routine dwi cases listed on page 31 in footnote nine. given that fact in the face of that reality, i don't think missouri can plausibly claim

that a categorical rule that would then apply nationwide of this court were to announce in the context of this case the warrants are never required in routine dwi cases could satisfy the standard discord is established, namely the exception being proposed service law enforcement is so compelling that they they warrantless searches objectively reasonable in every case. there is no evidence that i'm aware thing response to justice kennedy's question in certain evidence in the record in this case are priests in this case at this 25 states that prohibited warrantless blood draws in the circumstances my client confronted here have a lower conviction rate. >> a lot of states have varying degrees to which they want to enforce strict rules against drunk driving. that's exactly the kind of thing that worries me on your side. you have a bunch of states that

don't -- it's not easy to get a hold of the magistrate in 15 minutes. so if you don't have to because you have a qaeda provided company do every incentive not to make the magistrate available. on the other hand, it's pretty tough to say all the states have to have the best possible magistrate available 24 hours a day so somebody can call 10 instances a year because the guy won't take the blood -- won't take a breathalyzer. so i'm looking for an answer. >> i don't see an absolute rule. should you say look, here's what you have to do, it's better to have a second opinion or, which is the magistrates come us on the way to the hospital, you have to phone and try to get one and if you don't have and by the

time that the hospital, time and again is your last chance to get the breathalyzer us. he says now, then you blood the blood test. do you have a better solution? with a solution to the problem if you're going to reject, which you aren't, but hypothetically you might be that there's the rule. >> first of all, i really do have no reason to believe there's any jurisdiction in the country that is not deeply concerned about juncture that i recognize this is a serious problem. that is certainly not our position. secondly, the reason i think there is no evidence that in the states that prohibit warrantless drug drawing in dwi cases have lower conviction rates is number one, most cases they can obtain consent. number two in cases that they can't contain absent they been able to obtain warrants in a timely fashion to number three in the absence of warrants, all the facts really to probable

cause often create a compelling case for conviction in the absence -- >> you don't want to do and you don't have to. if you think of a second-best solution, it might always be better than what i is a second-best solution. i want to know if you want to say anything that would suggest we have a number of them floating around and i just wonder if you want to express any view on a second-best solution. >> our position that i'm not sure where they are classifying this as their first are some thing else. our position is within the context of schmerber, if there's and external come you have to play totality of the circumstances and reasonableness standard. in the context of the delay is intrinsic to the warrant requirement, absent any evidence that those intrinsic delays have interfered with the ability of

25 states in the country to enforce their drunk driving laws, this court ought not to adopt the category exception to the warrant requirement and the risk of doing it as you pointed out is to create this odd disincentive, the state that had the slowest and most cumbersome warrant procedures are the states to get a free pass a variable to override. >> is a great advantage to the prosecution and having a search with a warrant is supposed to a warrantless search in terms of suppression. it's not correct? >> there some advantage. a search pursuant to a warrant is much less subject than not pursuant to a warrant. generally speaking in these cases, probable cause that is derived from the officer's observations on the scene in defendant's performance in the field sobriety test that can support the search.

>> and ask how much blood has to be taken in order to test her blood alcohol? but his medical technology advances? i gather it's a substantial amount, but what if it answers to the point where you don't need any more light than you need now to test but sugar and you just have a little machine that makes a tiny break someone's finger to go to to a blood-alcohol test. >> i don't think the fourth amendment rules turns on the amount of bloody take out of somebody's body. an important, not bbt important dividing line is puncturing to scan the parties recognize this and other circumstances. >> the last but not in the solicitor general's brief tax that other methods including a sample. not as accurate as blood, they can help achieve the same result. one of the things i think

effects of view in this case is it's a of someone restrained in a representative of the state approaching them with a needle. i take a u.s.a. you need a search warrant for a year and google. >> this court has said that with a variety of circumstances where they weren't even one person cases. there is special-needs cases. >> what about the device to hold in front of it. you don't have to blow to balloon. you hold it in front of the individual that matters to some extent blood-alcohol content or at least whether the individual has been drinking. you don't need a search warrant for that. >> that's probably correct. he presumably do not need a search warrants for that tempest court held in schmerber that there's a fifth amendment issue of requiring to produce evidence used against you. you know what i talking about

his self-incrimination problem. protected by the search and seizure problem. if the government obtained evidence in a way that did not rise to level of the search, the requirement would apply. but we are not there. the warrant process that missouri has described is not as complicated. there are many places now that number one permit not only telephonic warrants, were offices are equipped in their patrol cars with laptop computers. they can set up these preprepared forms in a matter of minutes. >> here and not position to be making, an understandable position. your argument is these foreign or just easy as pie pizza and in this thing. the judge as an. it seems to me that diminishes the protection of the fourth

amendment to a far greater extent. the ideas the prosecuting attorney is supposed to spend time looking at this the first of may to the judge and a judge who spent time examining it. cats do these things in half-hour seems henry's bubble. >> i don't think it's unreasonable and we'll recognize this relatively recognize and standardized, but that does not mean there's not a value to the warrant process in the second block by a magistrate. >> would you go back and in this conversation "wizard of oz" focus of, which was the question presented, which is the essence, i think some of your adversary's arguments. i'm not sure you've really put forth. the essence of the argument is used for code their requirement when you know for a fact that evidence is going to dissipate

over time. basically they are saying this process undermines our right to get a warrant because the evidence is dissipating. we certainly have cases that talk about destruction of evidence be a reason to fork out the warrant. what makes this case different from those? >> i'd be happy to justice country answer that question justice sotomayor. my answers even if there are boxes on a standardized form, there's value to making sure the prosecutor and police have checked out the right boxes before they engage in a process as intrusive as putting a needle in somebody's arm. in answer to justice sotomayor's question, there's multiple answers. firstcome of this has on two

occasions considered and rejected the notion that the mere fact that alcohol dissipates over time is itself sufficient to proceed without a warrant. as justice ginsburg pointed out in schmerber from the discussion of what the court called special-effects would've been unnecessary. although corrugated to say this national dissipation of alcohol automatically these two. >> schmerber is an odd case because justice ginsburg and you are right they spent time talking about special-effects and then you read the opinion backwards and forwards and you can't find the special effects. >> the special fax for the accidents and injuries at the scene, which delayed the police for two hours before they could get to the hospital and initiate the process of applying for warrant at a time when there are no cell phones, faxes and the internet and i warrant applications had to be presented in person. that's a very different situation. >> -- if they have said more

police officers to the scene of the accident, they could've done it faster. what's the difference between a practical limitation in the limitation that exists in a world jurisdiction? >> that practical limitation, whether there were other officers on the scene that could have been sent to the scene. we're not asking for rule that they deploy their resources. if there's multiple on the scene i don't think it's unreasonable to say what can attend to the accident and the other can search for a warrant and that becomes totality of the circumstances. schmerber is not the only case. and bush versus and, the court expressly said to me the near dissipation of alcohol in the blood was not sufficient to justify warrantless entry into the defendant phone to arrest the defendant on dwi charge. it's not an inference one has to draw from trainee. the second thing a response to your question, justice sotomayor is biology. it is true alcohol dissipates over time through natural body

processes, but that's only after the blood-alcohol level has reached its peak and that is generally half an hour after somebody's had a last drink here thursday. time and which the body continues to absorb alcohol in the blood-alcohol continues to rise only is it then starts to dissipate. >> was the relevance of that? >> the relevance is that it's not true in every case that the state is losing evidence with each passing moment. >> depends on the last person left the restaurant right after they had a night s. if they had drinks before, the problem seems to be in either case. you don't know when a person's last drink was. >> you may or may not depending that the person tells you. and every case it's not the situation from the moment you set the driver his blood-alcohol level was going down. some cases it's going up.

>> a policeman has probable cause to believe somebody inside the house has strived. he hears the toilet flushing and he thinks they're flushing the drugs down the drain. he doesn't have to get a warrant as long as he reasonably believes the evidence is disappearing. the difference between your case here and that is specifically what? sates the same thing. >> the process is a very different process. and the typical drug case, what this court has considered when it has examined the question of whether the destruction of evidence qualifies as exigent circumstances so as to rescind what i call a typical turk case. kentucky versus kane and in those situations that the court is worried about is the suspect inside the house is going to flush the drugs down the toilet. >> it is now or never.

>> it is now or never. not only that, but most cases the state's case is going to disappear down the drain along with the drugs and the ability to destroy the drugs lies entirely within the control of the defendant and just to decide whether he puts the drugs down the toilet or not it when he does the destruction of immediate in toto. and the situation the process is gradual. it can take hours depending how much alcohol is in the system and its asset control the suspect. nothing to suspect you knew to expedite the process of the destruction. >> we know the defense attorneys love it when there's delayed because their retrograde analysis has more in our contingencies to make it unreliable. >> you'd much rather examined the states expert sample taken three hours then after the arrest. that's a given.

>> there is no doubt, justice kennedy that first above the ritual pre-extrapolation evidence now considered in various courts around the country is controversial is subject to cross-examination. we have not resolved the state of that evidence yet. but having said that. >> is how you would also distinguish the drugs/cases on the ground the violation of the integrity of your home is somewhat less than violation of the integrity of your body. >> that is certainly true as well. >> that goes into reasonableness determination. >> i will not deny the state's case will be easier if it does not have to obtain a warrant. this case the court is recognized in the past criminal investigations are easier. the state does not comply with the warrant process.

[inaudible] someone's going to scrape your fingernails. that's as intrusive as a blood test. >> i would say three things. i don't guess as intrusive although in that case the court describes it as a serious but brief intrusion on the value of personal security spit the court recognized the fingernail scrape was a serious first amendment issues. secondly, that evidence on the blood-alcohol evidence was under controlled by the defendant and in that case much like many course of their exigent circumstances cases. evidence to suggest the defendant was engaged in the process of degrading the evidence at the time the police at him and said we're going to preserve what is left rather than allow you to be the agent of your destruction. as the court setting can techy versus king cometh a different situation where the defendant

itself is destroying evidence. it may be reasonable for the court to say you can't destroy evidence and protest the destruction of evidence has created the exigency that requires the state to act out of warrant. but there is no agency in this case on behalf of the defendant. the defendant has no capacity. i come back to what i said before. it is true, this question came up earlier when mr. custer was being questioned. for its amendments are not determined by state law. in virginia versus more we all understand that. and determination of what is reasonable, the court has looked to justice kennedy's question in tennessee versus garner the course they have to stay fabricated the common law rule that would've allowed police to shoot any fleeing felon. in richards versus wisconsin has the states did not support. here we have half the seats in the country that would not have prevented what went on in this case. thank you very much.

>> thank you, council. sir custer, three minutes. >> thank you. everyone agrees the closer a chemical test is taken at the time of driving, the more reliable the evidence of intoxication is, the more reliable the evidence of impairment is. under the response to pressure would be mandated we are going to allow the most reliable evidence to dissipate and degrade over a period of time in favor of admittedly less reliable evidence taken at a later time. that is simply inconsistent with fourth amendment jurisprudence and other destruction of evidence cases. the respondents proposed rule here is completely apart to: unworkable. if there are no further questions. >> thank you, counsel. the cases submitted.

>> the greatest honor history can bestow is the title of peacemaker. this honor now beckons america

the chance to help feed the world outclassed out of the valley of turmoil and onto the hyatt grand piece that man has turned to insist on a civilization. >> we must embark on a bold new program but the benefits and industrial progress available for the improvement and growth of underdeveloped areas. >> congressmen stand her love and end up with a budget to kuester at the next of prior

taxes and lower spending. congressman levin is the ranking member of the house ways and means committee. his comments by the science monitor is about an hour. >> thanks for coming. i'm dave cook from the monitor. i guess this morning's representatives sander levin of the house ways and means committee. since his first visit of a welcome. he's a detroit native, earned dispatchers at the university of chicago, masters from columbia and a law degree from harvard. he was elected a state senate in 1964 and served as senate minority leader during the carter administration was assistant administrator of the agent t. for international development. he was selected the house in 1982 for your sectors rather was elected to the senate in march 2010 representative of an

unaccountable as chairman of the ways and means committee, this end of the biographical bowl portion coming onto the the thrilling process portion. as always, we are unaffected. no live blogging in treating her embargo in the breakfast is over except c-span has agreed not to use video for at least two hours after the breakfast and pizza helped c-span if you set your mike would ask a question, paula close to you. if not, though, around. if you'd like to ask a question, please do the traditional thing and send me settle nonthreatening signal. i'll do my best to call on one and all. to begin by offering representative lesson the chance for comments and all but two questions on the table. with that, thanks for coming. >> thanks for all of you for joining you. i was thinking yesterday as those seen to the president

about past conflicts over deficit reduction. mark and i were talking about how far back we go. it's a few years. i remembered some of the earlier deficit reduction battles behind. gramm-rudman one and two, greg mendenhall aimed and i voted for virtually all of them. i was thinking, what's changed since those to be clerics i think there have been two major changes. number one, the deficit is clearly much greater than matson added dimension. this secondly, when i think of the ways and means committee, what a change there has been in

this composition. when i joined ways in name, barbara, bo had just left his ranking member and he then went to the world bank. i worked with the financial and trade. bill archer is handling the tax material mainly dundalk radisson is working on health care. and i think a second major change that very much affects this to be is the changing composition of the republican party. i think it has moved very much more to the right however you want to describe it in the days when i joined the committee. and i think that makes it very much more difficult to handle the problems that we have before

us. so let me just comment briefly on where we are. you will hurt the president yesterday. we've had spending cut of 8 billion a half, a trillion and a half. it comes from the budget control act in the 211 appropriations. so we've had a trillion and a half as spending cut. in addition, as we all know, we passed not so long ago the tax bill, which essentially in terms of deficit reduction as over 600 billion to it. so is the president described if you take into account interest, we've essentially had deficit reduction of $2.5 trillion. the president said it all up an

additional $1 trillion deficit reduction. if we're going to essentially stabilize the bad, say it is 73% of gdp, we're going to have to, in the next period of time, have a deficit reduction of about $1.4 trillion. for me, that is so cool that we should set. and so, the argument we are having in addition to what the deficit target should be, we are having a major battle over what should be the composition of deficit reduction. so, let me just give you my point of view. the president yesterday to do that having alan and i think for us democrats, that the key.

there has to be a mixture of spending cut and further revenue and we need that balance for three reasons. number one, in order to promote economic growth. in my judgment, it follows that comes from cuts in programs, that will not accelerate economic growth. the second reason relates to income inequality. there's been a startling change in the last 20 years really. the middle class has essentially been stagnant and the figure really is in 2010, 93% of income growth went to the top 1% and the third reason relates to discretionary spending.

i was looking at the 10 year projection for discretionary spending and further domestic part of it. if we continue on this path in terms of rate of gdp, the domestic discretionary spending will be under 2%. there will essentially be cut close to happen this next decade. and so, we're talking about education programs. we're talking about health programs, including nih research. we are talking about infrastructure. we're talking about key domestic discretionary programs that are so important for the lives of the vast majority of the american people. so, let me just say two things about that.

number one, there has to be balance. and number two, i think it is vital as the president said so clearly yesterday that the pit feeling essentially must not be used as a web in the essentially takes time and essentially i'm as the basic full faith and credit of the united states of america. the president made so clear what would be at stake if that were to happen and i just think it's so critical that not occur. you know, i've been through these battles as i've said for many decades, but i don't remember anyone essentially saying that we should go over

the cliff in terms of the full faith and credit of the united states. the consequences would be, i think, dramatic, potentially cataclysmic. and for the republicans to essentially say, let do it, i think that would be a very, very seriousness take the foreseeable consequences. the federal reserve has said don't do it and i think the responsible position is we should not flirt with it. >> so they don't march on me with torches i don't turn asking the question. so you set a the cataclysmic and shouldn't be done in terms of reaching the debt ceiling, yet both sides seems locked in congress are not going to talk about the debt ceiling. speaker boehner says it can't be

done unless we cut spending at the same time. so having watched this for more than 30 years in congress, what are the odds of avoiding going over the cliff given were both parties are? >> the odds are that we won't do it. it's a matter of faith. it's a matter of consequence. i mean, those who say okay, let's toy with that, they are toying with the american economy and they are toying with the global economy. and so, i think it is somewhat -- it seems great to talk about to the ninth, but the closer you get to that class, the less likely it is that you'll find the u.s. over it. the mac for me ask one other in the loco to grind out third start. he told "politico" last week

that a balanced approach replacing the sequesters spending cuts and revenue should accelerate tax refund is fully possible this year for work and by person basis. does that square with people estate tax reform is going to because of scheduling. need to do with the limits of kuester and the house republicans concern if they do anything on tax reform, that they may leave themselves open to the senate not taking action and therefore an unpopular vote for no reason. are you optimistic on tax reform? >> first of all, we have to resolve this debt crisis in terms of sequestration and intern says the full faith and credit of the u.s. in the next six weeks. we are going to accomplish tax reform in the next six weeks. so we have a deadline but i

think cannot basically be moved for what we need to do in the next x weeks. and so, that will leave us adequate time to tackle the longer-range problems. were not going to accomplish tax reform in the next six weeks, but we need to essentially do the sequester, essentially find a balanced approach that's going to raise a trillion dollars or close to it. and so, that is why i have some optimism because we need to face up to the next six weeks, resolve it and then move on. [inaudible] >> -- i want to ask you one of the big teams of entitlement

reforms. how big a packet which you need to see in terms of republican to entertain -- [inaudible] let's take that same off the table for the next four years. is that a can of? what you need to see for you in some of your colleagues on the democratic side to say we're going to engage in the kind of conversations the other side is hitting on with entitlement. >> first of all, we have to take the debt ceiling off the table for federal period of time. secondly, regarding entitlement reform, let's take medicare. there have been two changes in terms of medicare and future. number one is that the rate of health care growth has been diminished and the rate of medicare cost increased has also

been diminished. that's the first consequence was the first event of the last three years. secondly, we have health care reform, which has accelerated diminished in health care costs increase and what i think we need to do in terms of medicare is for both parties in both houses and the white house to sit down and have a serious discussion about how we continue to get a hold of medicare and other health care costs. we really need to do that. social security we have to have the same kind of discussion. and so, i am urging the chairman of our community, the chairman of finance, the ranking them are in the senate, myself and the white house and others to sit down and look at medicare, look

at health care reform, look at the reduction in the increase and see how we intensify that. i was so mad as he really urge health care reform that we put into health care reform instrumentalities to change from a fee-for-service system. i went through this with my own family. fee-for-service is not a feasible structure for the president or the future. we have the instrumentalities they think to exchange should for a different system we need to do that. the senate to your questions? >> -- part of the fiscal facts of the debt ceiling kind of sequestration, continuing resolution. cannot be part of the many crises at the big crises her face than the next next couple

weeks? >> my own judgment is ready to face up to sequestration. we need to find a balanced rated do it and then go on to tax reform in town that reform. >> brian. >> in your view, did the president make an error strategically for a nickel merits by taking any worker in the debt ceiling off the table yesterday, saying whether this the coin of the 14th amendment, there's no way the treasury can effectively prevent the consequences of breaching the debt ceiling if it's not reached? >> now. >> it was the right call? >> i think so because it gets back to the first question for mr. kline about where we are. and to my comments about the change in the republican right, i really think the president had no choice but to essentially say to the republican party, you should not gobble with that

ceiling, that is something that would have such serious can't quinces. and i don't want to essentially see if i can find ways around that. this is a very problematic and essentially what we have to do is face up to the need to address the sequester and then move on. and i don't want you to use as a weapon in the debt ceiling because it's not a weapon against me. it's a weapon against the full faith and credit of the u.s. in therefore is essentially what it began to citizens of this country, our economy and the global economy. and i think he needed to be straight up and not say that

essentially what i will do is look for ways around it. the republican caucus, as we said at the beginning has so dramatically change from when i joined ways and means, which by the way has jurisdiction over the days dealing. the republican party really has to decide how much it's like to with the economy of the united states. i think it would be dangerous gamble and the president was correct to essentially say strata. so i'm with him on that. >> were going to go next to family lewis, mark shields and john mccain in. [inaudible] >> i'm not surprised. >> we don't even have the go-ahead to begin such negotiations. assuming there is a negotiation

that those involved in a fairly comprehensive free trade deal between the european union and asked, and take a look at what the issues are going to be, that's going to have a profound impact on the old regulatory regime both in this country and in europe. going into that, what would be your reservation about the deal that would emerge in those negotiations, what would you be most concerned about? >> you know, i said in a meeting of the group that in a case comment by position stated airways that we should undertake serious discussions between the u.s. and the e.u. at the same time, i think we need to be realistic. how is it to hot, over 10 years

ago and i think they were unnecessarily optimistic views about how quickly it could be done and how uncomplicated it was ended turned out that caution was the better part of judgment. the e.u. has events regulatory issues and i think it would have to be willing to essentially to open up their markets and not use various procedures to try to safeguard their market. so i favor receiving, but with an understanding that their argument issues to be looked at. and it's not going to have been very, very quickly, but i'm in

favor of starting it. i do my >> just simply fancy language for regulation. and now, whether we're going to allow european meat that may be contaminated with mad cow disease and they have the same concern. inevitably out of apple, reconfiguration of the regulatory safety net on both sides of the atlantic. is that a charming prospect to you? or d.c. opportunities to really kind of streamlined related to the economy as govern themselves? >> it's the latter. let me put it this way. we've dealt with issues regarding safeguard, health safeguards and others that other countries.

we did that in negotiations with colombia. we did that in negotiations cannot lock. if any two entities can resolve those issues, if e.u. and the united states. essentially what the e.u. has been doing in my judgment is to use their regulatory provisions to, i don't like overprotected factory because it's overused, but to essentially safeguard their market from our competition. so we ought to be out to do that if any two structures should be able to meet those tests, and desires to. that i think is very doable. the french will have to be willing to let us enter into their market. you know we've had the same problem with the russia pnt

either and i think we've basically taken a step to resolve it. if we can do a fresh, we can do with the e.u. >> mr. chairman, you about the republican party changing. the democrats are in the majority, they had, if i'm not mistaken, white root out democrats from arkansas, alabama, mississippi, louisiana, north carolina and virginia. they're gone. democrats are changed. it's an essay question that there's a gulf between the two parties. democrats are far more uniform to the pool party and when you were the majority party. cert when you came came to the house and even most recently. so was that on one side change? >> no mark, it is a novel insight, but i look to the roster of ways and means when i entered in the next two years.

i did that yesterday. and there's been a change in the composition with the democrats and republicans. and i regret what's happened. i think redistrict teen has really very much diminished competition. in the 90s, i was in a marginals he then had four contested elections. a few of us were talking yesterday about some of the ads they ran in this contested election. they were difficult. i think we need more of them. but let me be very clear about what my feeling is. there have been some change in the democratic ranks, but compared to the republican ranks, i think there has been considerably less change. i regret that there are far blue dogs within our ranks, but i

think the main obstacle to resolving the debt ceiling crisis and moving on to the tensions within the republican conference and to some extent in the senate on the republican side. i said this was some caution. there has been in a sense a radical is nation of the republican conference in the house and i think that the results of that were shown in the difficulty the speaker had in the last few weeks. so, i am not saying there hasn't been any change, and we should perhaps discuss this and we'll debate it. in terms of mainstream america, the republican ranks have changed much more dramatically

than half the democratic, texture of the democratic caucus. i say let the battle, i think i've been part of the mainstream within the democratic party ink i've been part of the mainstream within the democratic party and i think basically that means stream -- look, we are willing to sit down and talk about further budget cut. our insistence is that there has to be a revenue and a major tax ingredient. the american people basically agree with that, mark. the american people basically says there has to be balance. the american people basically say, said in terms of income inequality in this country, that we were out of kilter. ..

incurred the with an inane hearing of the intrigue been out on another route in hat onto our from out on another route in hat onto our from the ranks renewed talk more about how active or and and i'm aware record? loan the feeling you have a target in mind i have a

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to assure. with thick there reduces within the democratic ranks. i was in favor of instrumentalities going in that direction.

there are other serious discussions on a bipartisan basis, it is not likely to be triggered because of the increase of costs. that is how i would handle medicare. social security is not an immediate threat with the imbalance for croatia's it down and have a discussion how we safeguard and fortified social security for the long-term. let me finish quickly talking about tax reform. the camp set out 25% rate individual and corporate taxation. i said just setting that without an indication how to

get there was not realistic. you have not asked me how we will get more revenue for sequestration. in my judgment, we will take a look at proposals like the 28% proposal of the administration. with the caveat i think i was among the first if not the first, to be say -- careful how you perceive with itemized deductions. we passed a joint tax to give us chats -- charts for income distribution for each of them. it changes depending on what itemized deduction you choose. but if we will find additional revenue we have to look at itemized

deductions in a careful way. also look at loopholes. a number of you know, a few years ago i suggested we look at carried interest -- interest. and while it was the goal he thought it was abusive. i think this part of tax reform we should look at and other loopholes. they do that in europe now. >> even though we have been through this with the debt ceiling issue, what exactly would happen if congress did got raised the debt ceiling in what makes it a dangerous

option of? >> our credit rating would go down and how would we pay the bills? how would we pay social security? how would be paid veterans? >> there is no money? >> the republicans say pick and choose. so let's have a vote. who do we pack? -- pick? the president was right to say, in my judgment, to the republicans, don't do it. you are playing with fire. >> why? why are we playing with fire? what would happen?

>> those are two different questions. the republicans have an idea. we have been through this with a credit rating. they know what would happen so they say pick and choose. the president made clear we're not talking about future expenses but paying for what congress has voted. pick and choose is something at this point* is theoretical but will become very real without spelling out. you will not pay soldiers or send out social security checks are paid defense contractors?

that is what is involved. >> of democrats feel this is dangerous is a net the republican advantage to get to that point* to get as much as they can out of your party? >> no. that is not a weapon that will move us. >> so it is not that dangerous? >> it is dangerous. it is very dangerous. it is so dangerous this country should not toy with it. the president essentials says i don't want to be leveraged that way because you are leveraging this country. >> republicans of wyoming want to use unemployment reform with the payroll tax cut. though labor department has

not issued guidelines but they will. what do you think of that? >> the only to provisions may argue the bauhaus in conference, it only makes appropriate if you can drug test somebody who was let go allegedly because of drugs or supplying for a position that traditionally had a drug test. that is in the bill. the notion of the federal unemployment system to use drug-testing beyond it is not consistent with the law. they cannot do it. >> that is what the labor department is trying to figure out right now.

>> been notion it was a majority was a figment of somebody's imagination. there is no evidence that most people who would be covered by it is the majority. it is to provisions, aspects someone who was fired because of allegedly or someone who is applying for a job which traditionally has drug testing. that is a small minority of the cases. >> state and local groups have all expressed serious concern to you and your colleagues regarding talking across sequestration to shift the burden from state and local for infrastructure. can you reassure those groups that interest for

municipal bonds is off the table or, i know you are a proponent of build america bonds. and clarification your personally confident we will see tax reform happen after sequestration? >> on the latter i am not very confident. i am hopeful. with 220% the administration proposal had itemized and non itemized deductions. the state and local bond is probably the largest part of the non itemize deductions. i have some concern about that. we need to talk about the implication. it is not that simple.

some analysis day the way it works the main beneficiaries become the very wealthy. we need to look at that. in terms of state and local taxes, we also need to look at that. i am not in favor of just accepting the administration's 20% proposal, lot stock and barrel. those who urge caution to year-and-a-half ago i still continue to do so. i want to be in fact, there is no way to meet the requirements of sequestration without balance. there have to be more revenues and budget cuts.

let me remind everybody the speaker talked-about $1 million of revenues when he met with the president. we have now reached that. when i read the editorials that says i talk about more revenue r-texas, that is true. by the way what was the proposition of the republicans with revenues if? itemize deductions. why would they be totally resistant? governor romney this suggestion to said just pick a level. as part of the sequestration discussion we need to discuss further work on 9n -- non itemized discussions. i wasn't phatic about this we needed to include with the tax provision to reinstitution at the

$250,300,000 level. we already have built in some use of itemized deductions. >> medicare reform. moving away from the fee-for-service model but it seems those are skeptical that we need to have more immediate cuts. can you offer more specifics about common ground? raising the entitlement age? means testing? other ideas you can agree on? >> taking each of those i mentioned my concern about age. we need to have a very

serious discussion how it fits into health reform. number two, with other suggestions we can look at drug rebates what's at stake is over $100 billion that you know, . but let me be clear about this. we had a reduction of the escalation of health care cost. medicare with less than 1% increase. we need to sit down and ask why that has happened. hhs says it is because of health care reform.

i think that is part of it. i would like to engage all of my colleagues how we accelerate the move from fee-for-service which i think in the long term will be how we best get a hold of health care cost. i don't know your experience. i will not dwell on it except to say, my experience with fee-for-service with health care for my beloved late wife was in scrutable. it was not understandable. it was an efficient. we received bills from people whom i don't remember ever meeting. it is a system based on volume. we need to move away from it

here and we need to build in instrumentalities to do more. we already do considerable means testing. i don't think that is under step -- a understood. we do it for part b and prescription drugs. should we do more? we should look but we don't want to move it up to a point* where people drop out. we need to look it that. >> part of the jargon that we hear is lower the rates, a close loopholes. so is the idea tax reform should be revenue neutral is

off the table now? are you trying to raise revenue? >> i don't know. we need to move away from the rhetoric. i said this at the beginning. 25 percent job rate now it is suggested that should be re-evaluated. i never thought there was any reality to it. nobody said how to get there. now we have raised the rates. some extent addressed itemized dedthe rates. some extent addressed itemized deductions and we need to go into further discussion on that. so i favor tackling tax reform to get away from the notion that we will lower their rates and broaden the base.

it is too rhetorical. >> what about the president's taking by i will not discuss or negotiate the dusty -- the debt ceiling stance as we approach the deadline? is there a danger he does not give the republican is the base hit to walk out to? >> i don't think it is a matter of saving face. the president was right to to be blunt. i think what will happen in the republicans eventually will decide either plunge us over the cliff in terms of

the debt ceiling nor sit down with the president and discuss a balanced approach. there are only two alternatives. >> the president said he will not discuss it period. >> he did not say. he did not say he did not want to discuss it but what it would take to avoid sequestration. >> i want to change the subject do gun-control. you were here in the assault weapons ban passed in 1984 with this deep divide, is that a possibility? and any common ground piece of legislation you can get through?

>> no. i think it is realistic. i think the ground is shifting. i think it shifted when it came to how we deal with the deficit in this country. with senator mcconnell said the electorate voted for the status quo, he was wrong. i think the reelection of the president shifted the ground how we proceed with economic growth, address the role of the middle-class, address programs relating to those trying to climb up the ladder. i also think the ground shifted on gun-control

including the ground on which the president stands. i think everybody should be honest. i think people have shied away from gun-control because they thought it was politically difficult. i have been a strong advocate. may be because it is easier easier, i represent a district it is not easy. essentially i think what happened in connecticut it was a shifting of the ground of which everybody stands and that they will not shift and the way polarization has

increased in this country. lots of people think politically they can move. with the country as a whole has shifted. the president has shifted to some extent. he did knowledge is that. what is realistic? today there will be a presentation. we will pass some major provisions with magazines. we can do that. with more care surveillance, i think then shows come under regulation. with assault weapons, there is a 50/50 chance we will act.

>> with the possible loopholes you may include in the tax reform package. [inaudible] >> quickly, is this the last question? oil and gas came with the provision to replace the provision to strengthen manufacturing wto hauled it was in violation. we try to replace it so it was found to be wto politics

of. then repast at the last minute oil and gas was placed in their. it had nothing to do with manufacturing. it was done in the of the hours. we were stuck with this teeone to a replacement to help manufacturing in the country including oil and gas or bowed against the whole darn thing? three except in a compromise. it has to be extracted both oil and gas. >> now the last, last question. >> so basically the fiscal cliff deal has killed tax reform everything has been

taken out of that reform process and to make it not impossible but much less likely tax reform goes for this year. is that what you believe? or why should tax reform go forward? what is the upside? >> i am not saying that. what i am saying is we took some steps in the last package that has some ramifications for tax reform. i am not saying we should not sit down and talk about how we look at the tax structure and how we reform it. it is affected but nothing

close to the whole package. it forces people to be more concrete what they mean about tax reform. let me give you one example. some of the provisions we have, some of those are in the appropriations and summer in the tax structure. a think we can take a hard look at our training programs. we can do that in many respects. but in a sense, the opposite is what should happen. we should extend if not end of the debt ceil i